Gold production is an industry more people should be buying stock in. Mining and other companies that focus on the production of gold are great to invest in because they’re not as directly affected by the price of gold as if you were to invest in gold itself. “Gold saw a rocky time in price value in 2018, but quickly bounced back in the final weeks before 2019, with some gold mining companies seeing significant gains in stock” – says Well Hello CEO Mike Malkavich, an industrious CEO and gold investor. In 2019, gold mining companies have the highest potential to The value of gold continues to rise above the cost of production for gold mining companies, allowing profits to scale up.
If you’re interested in investing in some gold mining companies, here are some you should consider.
Barrick Gold is merging with Newmont Mining, after already merging with Randgold Resources of South Africa, to create the largest gold-producing company in the world. Doing so makes them more stable in the market, and hold better-quality earnings to deliver to their investors. The stock-for-stock transaction is worth $10 billion and will be called Newmont Goldcorp, making it an exciting time to invest in Barrick Gold.
AngloGold Ashanti Ltd.
Being the third-largest gold mining company in the world, AngloGold Ashanti Ltd. is a South African company formed by the merging of AngloGold Limited and Ashanti Goldfields Company Limited in 2004. This company promises to show more significant gains than they saw for the month of January in 2018 this year and is one to keep an eye on.
If you take a look at history, Franco Nevada is one of the top performing gold stocks of all time. Since their IPO of over a decade ago, Franco Nevada has returned 400% to its investors while outperforming the price of gold. They’re a gold streaming/royalty company rather a mining company themselves, meaning they finance other companies’ mines. This company is also completely debt-free, so I’d highly recommend investing in them.
Another gold streaming/royalty company to consider is Sandstorm Gold, and while they’re not on the same level as Franco Nevada, they have more upside potential and is also debt-free, with lots of growth potential. Sandstorm Gold also has a stake in the Hot Maden gold development project in Turkey, which is expected to be one of the most profitable mines in the world. If all goes well, this could make for a substantial outsized positive impact on Sandstorm and double their cash flow.
Kinross Gold Corp.
If you’re on the lookout for a company on the come-up, Kinross Gold Corp. of Ontario, Canada is an excellent choice. They oversee mining operations in six different countries, and the company is continuously growing. Kinross expects to open multiple new mining operations to begin to produce ore in 2019.
Newmont Mining Corp.
Again, as previously mentioned, Newmont Mining Corp. is forming the world’s largest gold mining company with Barrick Gold, but it has a rich history of its own. It’s been around for almost 100 years, and it’s the only gold mining company listed in the S&P 500. Investing in this gold mining company
Kirkland Lake Gold
Although lesser-known than other gold mining companies, Kirkland Lake Gold is an underrated company you should invest in. With four gold-producing mines in Canada and Australia, Kirkland Lake Gold is a company growing at an astounding pace. The company has plans to exceed its record-high production of 596,405 ounces of gold, and their capital expenditures are expected to peak in 2019. This will allow for greater cash flow that they can give back to shareholders as higher dividends.
While investing in mining stocks isn’t quite as popular as investing in tech, it still accounts for over 45% of the world GDP – mostly because natural resources are essential to the human experience.
Investing your money in a steady stock like mining is a great way for an average Joe like you to make some decent cash – especially in 2019. Let’s jump in and find out why mining stocks are so hot this year.
Since the beginning of time human have been obsessed with shiny objects. Kings emassed vaults of golden objects, pirates scourged the seas in search of jewels and assorted treasures – hell, even Jesus of Nazareth got a few fine metals for his birthday.
Even today, men and women all over the world use jewelry to displaying status, bring attention to victory, or in the form of self-expression. And thanks to more people gaining access to these fine items, the stocks just keep getting better.
Investing in gold-mining companies is almost always a safe bet for this reason. Gold-mining is a practice that can be traced back to 7000 years ago, so I don’t think it’s going away any time soon.
It should come as no surprise to you that steel is one of the most widely used metals in the world. Steel is perfect for building structures large and small, crafting knives, sculptures, tools, and just about anything else you can imagine.
Last year steel stocks gained an 8.9% increase in value over the last half of the year, and the streak hasn’t slowed down much. See, that’s the thing about mining stocks – you always know when they’re on the upwards trajectory, and you always know when they’re on the downward.
Steel isn’t the only metal that shifts in value, affecting the stock price for the mining companies. Aluminum and copper are good examples of metals that aren’t exactly stationary. And while steel is the most stable out of the three, it’s not immune to dips in value.
With construction companies expanding and repairing every city and road in the country, you know the price of mining stocks is about to go right up with it.
I don’t know if anybody out there has heard of Donald Trump, but he is the sitting president of the United States at the moment, and while the average citizen hates him – the mining companies love him. I don’t know if it’s the desire to turn America back into one big coal mine, or the money these mining companies are (allegedly) paying him, but Donnie has done away with a lot of the rules set in place by the previous president.
The Internet Privacy Rule, Dental Mercury Waste Rule, and Net Neutrality are among the list of repealed regulations issued by President Trump. Another one that he is particularly proud of is the coal mining regulation – the same regulation that kept most coal mining companies out of the U.S.
With this new change has come an opportunity for new investors, much like yourself, to start making serious money by investing in mining stocks. Coal mining companies are popping up all over the U.S. now that these regulations have been repealed, so start thinking about which ones you want to invest in. There’s no telling how long this presidency is going to last – or its changes for that matter. Hop on and ride the wave while you can!
There are an insane amount of variables to think about when committing your funds to an investment. Even a $20 investment must be carefully thought-out and painstakingly reviewed if you want to make some real money.
Investing in mining stocks isn’t much different than investing in something like soap or agriculture. It provides a recourse humans cannot live without – metal. In fact, mining stocks in 2018 made up over 45% of the global GDP, so I think it’s safe to say they’re doing pretty well. Let’s tackle some of the pros and cons of investing in a mining company.
Gold is a very unique metal, in terms of investment characteristics. I mean, it’s literally gold – the thing we literally use as the benchmark for value on the planet Earth.
In the world of mining stocks, gold mining seems to be a very safe bet for anybody trying to get their foot in the door. It’s considered a good first step for people that are trying their luck at investing in stocks for one reason; people aren’t going to get tired of shiny objects any time soon.
Another great pro for gold mining is its ability to gain value when everything else is doing poorly. You see, investors seem to like flocking to gold when things like stocks are tanking. Because it is literally value itself, gold tends to increase in value when most other stocks are on a downward spiral. That’s why all those goddamned ‘cash for cold’ commercials started airing when the down took a plummet in the recession.
Out of almost every metal on the market, cobalt is, without a doubt, one of the most unpredictable. Its value will fluctuate up and down depending on the day of the week, and that’s why so many people are interested in it.
On top of that – cobalt, lithium, and graphite are all predicted to rise in value in 2019 because of our new and intense desire for batteries. Phones, laptops, and even cars already run on these precious metals, and in the coming years, the price is just going to keep going up thanks to our ground-breaking innovations in hardware and production all over the globe.
Some people will buy stocks in cobalt and sell them the next day for a half-decent profit, and I think that’s the way to go. If you’re a real high-roller and you’ve got a little extra cheddar to spend, you should invest in a few cobalt companies and sell as soon as it goes back up, just like it always does.
We all know how the order of value goes – bronze, silver, and gold. It’s a basic tier of value we have created over a long time, but it seems to be missing something; platinum.
You might know it as the most precious metal on the planet, but not much else other than that. Something you probably didn’t know about platinum is that it’s not very economically efficient to mine. Platinum is mostly found in areas that are very difficult to mine – like the desert. In Africa lies 70% of the worlds platinum deposits.
And with the 15% of it in the Russian snow, and another 15% scattered across the globe, platinum has a minimal global availability. That’s why you should invest in a few old platinum mining companies that have been there since England left. They are the ones with the means to collect all of that precious metal.
There is no better way than to make a ton of cash than to make some smart investments in stocks. A lot of people compare investing in the stock market to gambling, but if you’re making smart and educated decisions about where you’re putting your money, then it’s nothing like gambling whatsoever.
While a lot of people are investing in stocks like Apple and Amazon, there is plenty of money to be made by investing in an older industry: mining.
Investing in mining is something that is overlooked in favor of hipper, sexier stocks, but you can make just as much money – if not more – by investing in mining.
You do need to know what you’re doing though! Here are a few tips on how to be successful in your mining investments!
Keep in mind that mining is a politically vulnerable stock. Because a lot of mining happens all over the world in different countries with different political climates, you can’t be sure that investing in Venezuela will have a high payout.
While some politically vulnerable areas might seem like viable choices because their prices are low or because that area has been known to have a high output of whatever your chosen company is mining, it’s never a good idea to invest in a company whose operations are based in a company that’s dealing with political unrest.
Consider ETFs (Gold and Silver)
Investing in precious metals like gold and silver is a great way to diversify your portfolio and to help you reach your investment goals especially through the investing in ETFs.
Think like an environmentalist
When it comes to choosing the right company to invest in, you need to think like an environmentalist! Do some research into what makes particular regions good for mining gold, silver, oil, what have you! Then invest in companies that have operations in regions with similar characteristics.
It’s also a smart idea to invest in established areas that are already known to produce product.
Don’t believe the hype
When it comes to stock, there can be a certain amount of hype surrounding a company or what a company is mining for. While it’s always smart to keep up on trends, you shouldn’t believe the hype if you have no reason to!
Make sure you do research and consult an expert before investing potentially volatile stocks.
gold stocks > gold bullion
When it comes to reliability, gold bullion is not the stock for you. It’s always a much better idea to invest in gold itself than bullion!
Consider stocks that are already producing
While you might want to get in while the share price is low, it may be a bad idea to invest in stocks that aren’t already producing. It may be more expensive to invest in a stock that’s already on the upswing, but it could be more beneficial in the long run.
While a company may be producing a lot of product on paper, make sure that they don’t have more debt than a newly graduated medical student!
It’s always a good idea to invest in something, but just what to invest in? Well, that’s up to you, but one of the best industries to invest in right now is mining. Whether it be gold, silver, or any other material, mining is a big business and an opportunity to invest in something profitable. If you’re looking to invest in mining, here are a few tips on what you should look out for and what you need to know to make the wisest decisions.
Know the two types of stocks
In mining, there are two distinct groups of stock, which are major and junior stocks. They’re exactly what they sound like, where majors are companies that are well-capitalized with a long history, often world-spreading operations with a slow and steady cash flow, while juniors tend to have little capitals, a short history, and high aspirations for huge returns in the future.
One thing you should be aware of when it comes to junior mining stocks is that there’s always the possibility of failure. Many junior companies receive this fate, unfortunately, but at the same time there are those that achieve success, and a major becomes interested and pay a premium to absorb the company, leading to decent returns to investors all year-round.
Understand the risks and rewards
Since both types of mining companies are different, they have different risks and rewards you should consider when investing. Major companies, for example, are the sum of all their deposits being staked or mined plus their history, while junior stocks depend on the results of its feasibility studies.
What does this mean?
The contents of any major mining company’s single deposit that is being staked or mined aren’t likely to shake its stock value much, but if a feasibility study is positive for a junior mining company, they see its value shoot up, but if it is negative, then the opposite will happen. In major mining companies, a change in market value for a mineral of a more significant percentage of deposits has a larger effect than a new or failed deposit, and junior mining stocks don’t typically mine a feasible deposit to the end, but instead either sell the deposit, or themselves, to a major and move on to find another. As such, the biggest risks and rewards lie with junior mining companies.
Choose how you invest
With this information, you should be able to choose what type of company you want to invest in. If you’re looking for a company with a lot of potential and don’t mind being patient in seeing returns, junior mining companies are great for their potential to offer a lot in the right market and for their risk capital, while major mining companies are lower-risk and have the potential for dividends with some appreciation. Both stocks, however, follow a business model that is based on using up all the resources they own in the ground. But because they aren’t aware just how much resources they have in a given deposit, the value of a mining stock roughly follows the market value of its reserves, paying a premium to companies with a long history of providing those reserves to the market.
Despite dismal nickel prices as of late, there’s no stopping nickel exploration and development companies on all sides of the globe from pushing forward with their projects.
Australian company Poseidon Nickel has announced that it has upgraded its indicated resources at its Lake Johnston project in Western Australia by 50 percent as a result of a geological review of its Maggie Hays and Emily Ann deposit.
The resources are now estimated at 3.5 million tons with an average 1.49%, or 52,000 tons of nickel.
The report noted that this is welcome news for the company because Lake Johnston is “considered to be a near-term production project” and re-opened just recently. “The upgrade is a key step in the definition of the likely project life by increasing confidence in the shape, grade and position of the mineralisation to be mined.”
Poseidon is planning to make the Lake Johnston its second production project this year if ore sales targets are met at the Winadarra project. The project is reported to cost only A$8.3 million.
The report added that Poseidon aims to move Lake Johnston, Windarra and Black Swan into production as it will allow it to run the second largest sulphide nickel operations in Au
Lake Johnson possesses “excellent advanced exploration targets from the Maggie Hays mine”, according to company literature. The project’s tenure is supported by 10 exploration licences, two general purpose licences, four miscellaneous licences, 11 mining leases and one prospecting licence. The company also holds an underlying tenure for the project that is equivalent to a vacant crown land.
The Lake Johnston assets also encompass a modern 1.5 million tons per annum treatment plant and large ground position, with numerous life extension exploration targets.
Elsewhere, in August of last year, Amur Minerals Corporation (OTC:AMMCF), another mineral resource and development company based out of Russia reported to having upgraded its reserves by as much as 25 per cent. That increase means that the company’s Kun-Manie project now ranks as one of the top 20 sulphide projects in the world.
Amur announced that month that it had upgraded ore reserves in the project site from 31.5 million tons to 39.2 million tons of ore containing 219,000 tons of nickel and 58,100 tonnes of copper which represent a rise of 28 percent and 22.3 percent respectively.
“Having nearly a three quarter of a billion dollar EBITDA at today’s metal prices is highly encouraging and supports the board’s belief that Kun-Manie will ultimately become one of the largest nickel sulphide projects in the world”, said chief executive Robin Young.
The company forecasts that the upgrade would allow it to earn some US$726 million based on a nickel price of US$8.50 per pound, and a little over US$1billion if nickel prices reach US$9.50 per pound.
Noting data from Citi Research, Platts reported that nickel prices should rebound by the second half of 2015 as nickel pig iron production level, rising demand from the European stainless steel market, and dwindling nickel ore sources.
Highland Gold is pleased to announce that on 30 November 2004 it was awarded the licence for the Taseevskoye Deposit by the Russian Ministry of Natural Resources. This award follows the public auction held on 23 September 2004, where Highland Gold acquired the rights for 100% of the Taseevskoye Deposit with a bid of 742.35 million roubles (US$26.5) million. The licence provides Highland Gold with the rights to develop and mine the deposit for an initial term of 20 years.
Highland Gold’s immediate plans for Taseevskoye include re-estimating the resources and financial parameters in accordance with current standards and economic conditions. Highland Gold has engaged Snowden Associates of Perth, a company specialising in ore reserve definition, to complete the resource re-estimation. On completion of this work, which is expected during the first half of 2005, Highland Gold plans to engage a new mining consultant to assist the company in defining the appropriate scope and size of the project that will be the subject of a new, detailed feasibility study.
As announced on 23 September, the resources currently approved by The State Committee for Resources are 1.7 million ounces of gold (C1 and C2). Following completion of the study by Snowden Associates, a revised resource statement will be submitted for approval by The State Committee for Resources.
In January 2004, Highland Gold and Barrick Gold exchanged reciprocal participation rights on certain new acquisitions, which includes Highland Gold’s acquisition of the Taseevskoye licence. Barrick has expressed its intention to exercise its 50% right to the Taseevskoye deposit.
The Taseevskoye gold deposit is located two kilometres south of the town of Baley (Population: 15,000) in the Chita region, Eastern Siberia. It lies 56 kilometres south by paved road from the Trans Siberian Railway station at Priiskovaya. Chita, the regional capital, is located 285 kilometres to the west of Baley.
The deposit was discovered in 1941 and during the period 1948 to 1994 the Taseevskoye mine produced 6.4 million ounces of gold from 16.3 million tonnes of ore at an average grade of 12.2 g/t Au. This was produced from a swarm of epithermal gold bearing quartz fissure veins located within a circular area 1000m in diameter. The predominantly underground mining operation concentrated on three principal vein systems, leaving un-mined a large lower grade mineralized envelope contained within an argillic alteration halo surrounding the fissure veins. Highland Gold’s acquisition of Taseevskoye is rooted in the potential for open pit mining of this large lower grade resource, which was also the subject of a 1997 bankable feasibility study commissioned by the former licence holders.
Historical Production from the Taseevskoye Deposit
Gold (k ozs)
1948 – 1992
1984 – 1994
Historic Bankable Feasibility Study
Between 1995 and 1997, Kvaerner Metals was commissioned to deliver a bankable feasibility study on the Taseevskoye project. The scope of this study covered Geology/Ore Reserves, Geotechnical/Hydrology, Survey Control, Mine Design, Metallurgical Testwork, Environmental, Mine Waste Management, Process Design, Engineering, Cost Estimates and Scheduling. The mine process facilities and infrastructure were to be developed for a process plant with a throughput rate of 1.75 million tonnes per year over 16 years, while mine production was optimised at 2.5 million tonnes per year with selective stockpiling of mine production for treatment of higher grade ore in the initial 10 years and lower grade ore to be treated in the last 6 years. The study was completed in October 1997 and is summarised briefly below.
1997 JORC Resource Estimates
In addition to The State Committee for Resources’ estimates, as shown above, Snowden Associates prepared an historic geological resource study for the Taseevskoye deposit in June 1997. The resource classifications assigned were based on underground channel sampling on drifts, cross cuts and “orts” on the levels at a maximum spacing of 40 m and more frequently 20 m or less. Drill hole spacing, both underground and surface, was basically 40 to 50 m on section and from 40 to 80 m down dip. The database contains assay results from approximately 23,000 underground channel samples, 1,113 (643 from Surface; 470 from Underground) historical Russian holes and a further 82 holes drilled in 1996-97.
1997 JORC Resource estimates
0.3 g/t Cutoff
1.0 g/t Cutoff
2.0 g/t Cutoff
1997 JORC Reserve
An historical pit optimization analysis by Snowden defined an optimum shell with dimensions of 1,100 metres by 1,200 metres with a maximum depth of 260 metres containing 232 million tonnes of ore and waste.
Using a cutoff grade of 0.88 g/t Au and a gold price of US$380 per ounce, diluted, recoverable, proven and probable reserves totalled 28.2 million tonnes of ore at an average grade of 3.23 g/t Au and containing 2.9 million ounces of gold. The stripping ratio to recover these reserves is 7.25 t of waste per tonne of ore. Within this pit design is 3.6 million tonnes of Inferred Resource grading 3.66 g/t Au that has been treated as waste.
The grinding circuit was to consist of a jaw crusher, a semi-autogenous grinding (SAG) mill and a ball mill operating in closed circuit with cyclones. After grinding 80% of the ore coming in, 53 microns, the slurried ore was to flow by gravity to the flotation circuit where a gold rich sulphide concentrate containing about 85% of the gold values would be produced and thickened before being pumped to a pressure oxidation circuit. The oxidized sulphides would then be leached in a carbon-in-leach (CIL) circuit to recover about 97% of the gold contained in the concentrate, thus 82% of the total contained gold was to be recovered in the concentrate circuit.
Flotation tailings were to be thickened and leached with cyanide in a second CIL circuit to recover an additional 5% of the gold. Loaded, activated carbon from both CIL circuits was to be treated separately by elution in a single carbon stripping vessel, followed by electrowinning to recover the gold in a sludge which was then to be refined in a furnace to produce doré bullion. Tailings from both CIL circuits after cyanide destruction and the neutralized solution from pressure oxidation were to be pumped to the tailing impoundment area in a natural valley, located about 4 kilometres from the plant.
Overall recovery of gold in the first 10 years was to be about 87% of the values contained in mill feed reducing to 82% in the last six years.
1997 Estimated Capital and Operating Costs
Total capital costs of the project were estimated to be US$170 million as of the third quarter of 1997. Total estimated operating costs for the first 10 years of the project were to average US$20.94/t of ore milled. For the last 6 years of the project, total operating costs were expected to reduce to an average of $9.84/t milled.
Commenting on today’s announcement Ivan Koulakov, Managing Director, said:
“Given that Taseevskoye is a very well known and well developed deposit that was subjected to a full Bankable Feasibility Study in 1997, we view it as an acquisition that is complementary to our existing assets and that fits firmly within our core strategy.
“Taseevskoye will create new economic opportunities for the people of the Chita region and will create value for Highland Gold shareholders as our company continues its impressive record of growth in Russia and takes yet another step closer to an annual production goal of 1 million ounces of gold.”
Carpathian Gold Inc. (TSX:CPN) is a mineral exploration company that is focused on the development and exploration of two advanced gold and gold + copper projects with the goal of becoming a gold producing company in mid 2012.
Currently, Carpathian has an advanced gold project in the state of Minas Gerais, Brazil and a gold + copper project within the Apuseni Mountains of Central Romania, which combined host +12 million gold equivalent ounces in all resource categories.
The project in Brazil is referred to as the RDM Gold Project which hosts a NI 43-101 resource of 1.5 million ounces (in all resource categories) of which 1.0 million falls within an open pit. A completed Preliminary Economic Assessment in August 2009 on the open pit portion of the resource only, indicated the project can be 6,000 t/d, convention CIL operation producing an average of 102,000 ounce per year for an initial mine life of 7.1 years. At a gold price of $1000 gold the project has an after tax NPV7.5 of US$143.0 million and an after tax IRR of 41%. Carpathian is in to feasibility and production stage with management expectation of commencing production in mid 2012.
In Romania, Carpathian has discovered a world class size gold-rich, copper porphyry system referred to as the Rovina Valley Project (RVP). The global mineral resource (NI 43-101 compliant) of this system, based on drilling results from 2006 through 2008, totals 10.7 million gold equivalent ounces (all resource categories) of which 7 million is gold only. The preliminary economic assessment (March 2010) for the RVP Project has been released and is very positive.
Carpathian has extensive exploration and operation teams in both Brazil and Romania working towards the advancement and development of these two projects.
Romania Romania is particularly well endowed with metallic ore deposits: gold has been mined in Romania since pre-Roman times and the country has been one of the most important producers of precious metals in Europe. Carpathian Gold, through its Romanian subsidiary, holds the Rovina license in the Golden Quadrilateral mining district of Romania.
The richest concentration of gold in Romania has been in the Apuseni Mountains, in this area which has historically produced in excess of 55.0 million ounces of gold from epithermal deposits, and ranks as one of the richest epithermal gold producing regions of equivalent size in the world.
Recent exploration within the Golden Quadrilateral by Gabriel Resources at their Rosia Montana deposit has identified a proven plus possible gold reserve of 16 million ounces. Also within the Golden Quadrilateral, European Goldfields has recently announced a drill-indicated gold resource of 3.5 million ounces on their Certej deposit.
Rovina Valley Au-Cu Project, Romania
Located in Romania’s Golden Quadrilateral with historic Au production of over 55 M oz.
NI 43-101 Mineral Resource (Colnic, Rovina & Ciresata porphyries) of: – Measured + Indicated: 3,070,000 oz Au & 759 million lbs Cu – Inferred: 3,890,000 oz Au & 663 million lbs Cu – Global Resource*: 10,750,000 oz Au eq***
Deposits still open and not yet been fully delineated. – Positive Preliminary Economic Assessment – 40,000 tpd mining with standard flotation processing – Ave. 343,600 Au-eq1ounces/yr over a 19 yr mine life – NPV5 $1.130 billion (@ US$1000/oz gold price & US$3.00/lb Cu) – IRR, 24% (@ US$1000/oz gold price & US$3.00/lb Cu)
All infrastructure, including road, power and water, adjacent to the deposit
Still open in all directions, Drill Hole RGD-17, 716 m at 1.14 g/t Au &0.16% Cu.
20,000 metres of drilling started in Dec 2010 on Ciresata deposit and satellite targets on RVP licence
Exploration license to be converted to Mining license in early 2011
Brazil The Riacho dos Machados (RDM) Gold Project is in southeastern Brazil approximately 540km north of Belo Horizonte in Minas Gerais State, one of Brazil’s oldest and most important mining states. The project consists of a single 1000 – hectare mining concession and 12 exploration areas totaling 21,000 hectares. The mining concession includes surface rights ownership for 266.6 hectares and has significant mining infrastructure inherited from an open-pit oxide heap leach gold operation (Mina de Ouro Fino) that was operated from 1989-1997 by Companhia Vale do Rio Doce (“Vale”), Brazil’s largest mining company.
This permitted brownfield gold project has an historical resource (from Vale) consisting of 560,000 ozs Au with 3.8 million tonnes at 4.6 g/tAu and an upside exploration target potential of 5-15 million tones of 3.0 to 4.5 g/tAu.
Riachos dos Machados Gold Project (RDM)
Permitted brownfield gold project with an updated NI 43-101 Mineral Resource (July 2010) of: – Measured + Indicated: 812.3 koz Au (200% increase) – Inferred: 692.9 koz Au – Global Resource*: 1,505,200 oz Au
Robust Preliminary Economic Assessment & Near-term OP production (July 2009) – An initial open pit operation at 6,000 tpd – Avg. 102,000 ounces/yr over initial 7.1 yr mine life – NPV7.5 ,143.0 million (after tax @ US$1000/oz gold price) – IRR, 41% (after tax @ US$1000/oz gold price) – Low start-up capital, attractive “economic grades” with excellent cash flow and short payback period.
Existing infrastructure, roads, power, water & ownership of surface rights.
Currently in the feasibility stage , expected Q4 2010
Exploration upside: Deposit open at depth and along strike with identified extension targets along strike (drilling currently in progress).
Additional Address/Key ContactInvestor Relations Mike O’Brien – Ext 238, firstname.lastname@example.org
BRAZIL OFFICE Alameda da Serra, 1021 Office 211 Nova Lima – Minas Gerais Brazil CEP:34.000-000 Phone: +55 (31) 3286 5703 ROMANIA OFFICE SAMAX Romania S.R.L. Str. Aleea Viitorului, nr. 2A, Sala 6 Cod 330075, Deva Jud. Hunedoara , Romania t: (+40) 254-232-070 email@example.com
CapitalBasic Shares Outstanding: 385.4 MM 21,110,000 options outstanding at a weighted average exercise price of $0.40 and maturity by May 13, 2013. 11,944,130 warrants at $0.33, maturity May 6, 2012. 10,889,376 wt at $0.45 maturity Dec 3, 2011. 1,339,296 Brokers wt at $0.23 expiring May 6, 2011 and 1,197,381 Brokers wt at $0.34 expiring Dec. 3 2011. Fully Diluted: 430.6M
For some time now the Australian government has stuck to a policy of only allowing three mines to produce uranium, , but demand from around the world as the price of uranium has risen may bring about a change of heart. The re-election of the Howard government, which now also has control of the Senate, could be a major factor, but a lot will still depend on State governments which control mining and export licences. South Australia has always been supportive and reaps handsome royalties from the Olympic Dam and Beverley mines and the Northern Territory takes the same attitude towards the Ranger mine operated by Energy Resources of Australia, which is itself 65 per cent owned by Rio Tinto. Western Australia, on the other hand, has been against any expansion of uranium exploration. There is an election in the offing, however, and this stance may change if Labour is thrown out.
In the past there have been more than ample supplies of enriched uranium for nuclear power stations around the world. Above-ground strategic stockpiles of the metal put aside by utilities and for use in nuclear weapons have been unwound and highly-enriched military uranium in decommissioned bomb arsenals diluted and reprocessed. As a result there has been a lack of investment in uranium exploration and mine development over the past 10 years or more. Things are now changing dramatically with higher oil and gas prices increasing the popularity of nuclear power. Above-ground stockpiles are now heavily depleted and rising demand has driven the world spot price for uranium oxide from US$7.10 per pound in late 2000 to US$15.50 at the beginning of this year and it is now above US$20/lb which is a 20-year high
This is no temporary blip as figures for the end of July showed that 30 reactors were in construction, another 32 were on order and 72 more were proposed. Japan, China and Taiwan are planning substantial increases in capability and all three are ideal markets for Australian producers. This puts a focus on Giralia Resources which is the only Australian junior involved in an active drilling programme for uranium as it has a 25 per cent free carried interest in tenements around the Beverley mine which produces around 700 tonnes a year of uranium oxide. Its partner is Heathgate Resources which owns and operates the Beverley mine and is related to the private US utility General Atomics.
The joint venture is exploring the Lake Frome property which covers some 2,000 sq kms around Beverley and is known to contain potential extensions of the mineralised palaeo channels being mined at Beverley. A drilling programme is now underway to assess the uranium potential and the regional/structural geology of areas to the south and east of the Beverley mine. Recent geophysical surveys have traced a well defined structural target called the Poontana fault on the Lake Frome tenements which is related to the regional setting of the Beverley uranium deposit. To date exploration has been a bit laid back as Heathgate was restrained from expanding its uranium operations. The possibility that the Australian government may open the door a bit wider for exports could be of great benefit to Giralia which is free carried up to a decision to mine.
Uranium is only a part of Giralia’s portfolio, however. Leading the rest is the 100 per cent owned Snake Well gold project which runs for 45 kms along strike of an under-explored greenstone belt in the West Murchison region of WA north east of Geraldton. The company has already delineated a gold resource of 2.49 million tonnes at 2 g/t gold for 160,000 contained ounces and drilling is in progress to extend known deposits and test new targets with first pass holes. Promising results have been received from drilling to extend the Mixy lode with an intersection of 12 metres at 5.4 g/t gold and 0.4 metres at 32.1 g/t with conspicuous visible gold. More results are awaited , but it is already clear that the resource will have increased significantly when the next estimate is announced.
Giralia is also earning into Haoma Mining’s Daltons nickel project in the Pilbara. At the moment diamond drilling is in progress to test conductor targets where previous high grade nickel-copper-sulphide intersections have been reported. The company is involved in a couple of other gold and nickel jvs and the only other wholly owned project is the Blue Rose copper – gold project in South Australia. Drill targets are being defined by ground gravity geophysical surveys with the focus on primary porphyry skarn and IOCG mineralization under extensive near-surface secondary copper intersections. Last, but not least ,the company has broken out of Australia and also owns the Ann Mason copper project in Nevada. Back in the 70s a porphyry copper resource of 495 million tonnes at 0.4% copper was estimated, but work since then has indicated a high grade core and data is currently being integrated. For the moment, however, it will be uranium that drives the share price.
Analyst John Meyer has produced an interesting paper which claims that collapse of the US dollar effectively renders China more competitive, driving growth BUT will not force Chinese re-valuation. The State Council and Communist Party State Central Committee will meet over the next few weeks at the central economic work conference in China to decide on general policy in the coming year.
At the forefront of the agenda will be the objective of maintaining stable economic growth and political and social stability. China , after all, does not have to concern itself with elections which cause swings in economic policy in the West. The huge investment in dollar bonds will also come under scrutiny as there has recently been growing evidence of a preference for Euros rather than US dollars for the country’s currency reserves. The point has already been made by the deputy governor of the Bank of China that there is no intention to devaluing the currency despite pressure from the Bush government and international markets.
The brokers are of the view that China has set its own internal targets at a rate of around 7 per cent -9 per cent in terms of growth in gross domestic product, and that it will stick to this come what may. This could allow 10 per cent -20 per cent metals demand growth within China, much of which will need to be sourced internationally.
There is bound to be some scare mongering from metals traders in Asia over potential Chinese re-valuation and over Chinese consumption levels. But it is Numis’s view that China will continue to consume substantial and increasing quantities of raw materials, particularly copper and steel related raw materials such as iron ore, nickel, manganese and chromite ores. These commodities are effectively forming the foundations of China’s new economic era and development and China is unlikely to consider the demands of the rest of the world in its drive to develop its infrastructure and economy.
While China is happy to trade with the rest of the world, its stated policy is to manage a relatively small trade surplus/deficit and to remain as independent as possible from the rest of the world. Fortunately for western mining companies China is relatively short of a number of key raw materials which it continues to import. Chinese mining concerns have been slow to discover new prospects and their safety record has not been good, so much so that the authorities were reported to be closing many small coal mines.
Mining may be one of the world’s oldest professions, but China appears to have lagged the west in the development of large-scale mining and exploration organisations. This may be due to the unusual expertise required to discover and develop efficient mining projects. Alternatively it may also be due to the difficulty in discovering prospects in a geology where there is a lack of rock outcrop and where overlying sand cover effectively masks underlying prospects from many geophysical techniques.
There is little doubt that Chinese miners, who traditionally worked in mines in Cornwall, the US and Australia in the 18th and 19th centuries, may now discover more in their back yard but the prevailing geology of China may continue to retain its riches and new discoveries may take some years to bring to fruition.
John Meyer concludes that the Chinese may therefore remain a net importer of many key raw materials for some years and that Western mining concerns should continue to benefit from a continuing high level of demand within the region. Bulk shipping companies and recycling businesses should also continue to fare well from a continuing increase in this trade as will miners which are able to operate in US-dollar based currency zones where they benefit from its weakness..